The company reported that it had sold $2.4 billion in what it called noncore assets during the first half of 2013. Those sales helped the company reduce net debt to $12.4 billion at the end of the second quarter from $13.4 billion at the end of the first quarter. So far in the third quarter the company has sold assets in the Haynesville and Eagle Ford shale geologies for $1 billion.

The company also continued to pursue its strategy of emphasizing production of liquids (oil and natural gas liquids) over natural gas. Although the price of natural gas liquids has been under pressure lately from the increase in supply created by the U.S. energy boom, these prices have still held up better than those for natural gas. Oil volumes rose 12% from the first quarter and liquids now account for 25% of production, up from 21% in the second quarter of 2012. Natural gas production was flat with the first quarter of 2013 as the company balanced strong growth in the Marcellus shale with declining production in other regions.

All this added up to a satisfying 10 cents a share in earnings above Wall Street expectations and a similar beat on revenue. Earnings came to 51 cents a share. Revenue climbed 37.9% year over year to $4.67 billion, well above the $3.28 billion analyst consensus. Operating cash flow climbed by 53% year over year to $1.37 billion as the company continued to reduce its capital spending.

The big worry with Chesapeake’s current strategy of cutting capital spending and selling assets to reduce debt is that the company will cut too far into the bone on production. It was therefore good to hear the company raise its guidance for 2013 oil production by 1 million barrels. That represents a growth rate of 22% to 28% year over year. Chesapeake isn’t immune from the pricing problems bedeviling the U.S. natural gas industry. The company reduced its guidance on natural gas liquids production by 2 million barrels for the full 2013 year.

As of August 13 I’m nudging my price target on Chesapeake to $33 from the current $31 a share. I’d go higher on the progress in restructuring and reducing debt except that natural gas prices don’t look likely to move higher in a significant way in the near term as increased production from the Marcellus shale adds to supply.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Chesapeake Energy as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/.